Posted by The Team at Brand Financial Training on October 13, 2020 in Newsletter
13 October 2020
The October exam sitting for many of the CII exams has yet again caused a great deal of stress and confusion for candidates. Many of you have told us that you have received contradictory information from the CII – with some even being told to book an exam in a locked down area! Our own team have also experienced this directly, along with long call queues at the CII and long delays in responses to emails sent to them.
We have been in contact with the CII with regards the numerous issues you have told us about. However we also urge you to contact the CII directly to let them know about your experience with the October exam sitting. It is only by receiving your feedback and that of others, that CII can fully understand the extent of the chaos and confusion caused, and hopefully make improvements going forward.
For those of you still to sit your exam this week, good luck! For those of you who have already sat your exam, we hope it went well. We’d love to hear how it went.
The Team at Brand Financial Training
Looking at Phased Retirement By Way of an Example Calculation
Here, we provide readers with a useful example regarding phased annuity purchase – perfect for your CII R04, J05, AF7, or AF8 exam preparation.
Someone wishing to phase their retirement can do so by either crystallising just part of their pension fund and gradually crystallising the rest over the next few years, or if they have separate policies, they can be crystallised at different times; this is known as segmentation. This can be done through phased flexi-access drawdown, phased capped drawdown, phasing UFPLS, or by phased annuity purchase, which is what we are going to look at in this article by way of an example.
Charlie is aged 60 and works part-time earning £15,000 per year. He now wishes to top this up by taking an income from his uncrystallised SIPP through phased annuity purchase. The provider does not allow partial encashment of segments. The SIPP is valued at £600,000 and segmented into 1,000 policies. Charlie requires a net income of £15,000 in the first year and has found an annuity rate of 5.6%, which he wishes to proceed with.
How many segments need to be crystallised to provide Charlie with his required level of income?
Firstly, we determine the value of each segment of Charlie’s SIPP: £600,000 ÷ 1,000 = £600
This provides 25% PCLS and the remaining 75% provides the income:
£600 x 25% = £150 (PCLS)
£600 x 75% = £450 x 5.6% = £25.20 gross (annuity income)
Charlie requires a net income, so we now need to deduct basic rate income tax – £25.20 x 80% = £20.16. We can now establish the total net income per segment:
Next, we work out how many segments need to be crystallised to provide the amount of net income:
£15,000 (target income) ÷ £170.16 (net income per segment) = 88.15
This tells us we need to crystallise 88.15 segments to achieve the required net income; however, as the provider doesn’t allow partial encashment, we round this up to 89 to provide Charlie with an income of:
89 x £170.16 = £15,144.24
The income is made up as follows:
89 segments x £150 (PCLS) = £13,350
89 segments x £20.16 (net annuity income) = £1,794.24
Often we underestimate the importance of good lighting in our study and workspaces. Here, we discuss the factors to consider when setting up the area in which you will be spending many an hour of revision time!
Clocks go back across the UK on October 25, after which it’s the season for Guy Fawkes, pumpkins and, if you’re a fan, Strictly Come Dancing. For some, it’s a time of grey, chilly, damp slog; others relish the cooler air, stunning foliage, and general cosiness.
But whatever your take on autumn, the nights are undeniably drawing in. And that may have more implications for your studying than you realised. More than ever, at this time of year it’s important – quite literally – to see things in a good light.
And while we might not think about it that often, the right lighting is crucial to effective working.
Some people experience SAD (Seasonal Affective Disorder) at this time of year. This is a persistent low mood brought on by the onset of the colder season. A lack of natural sunlight is a key factor behind this condition, and light therapy in the form of a special lamp or lightbox is one of the recommended treatments – the good news is that there are various options to help that don’t involve medication.
In this article, however, we’ll be considering the impact of poor lighting on studying and eyesight. After all, your mind may be razor-sharp and focused, but if your eyesight can’t keep up because of poor lighting, you will achieve less than your full potential.
..."The calculation workbooks for R02 and R03 are very good indeed. They were a major factor in helping me achieve good scores in these exams (89% and 80% respectively)..."
Julian Sellen, Leatherhead
Available for AF1, AF2, AF4, R02, R03, R04, R06, J03, J05, J10, J12, CF1, CF6
Many exam-takers lose vital marks when it comes to performing calculations as they haven’t nailed down the exact process and order in which to perform the calculations, and haven’t spent enough time practising them.
The number of marks gained or lost on calculation questions can make the difference between a pass and a fail. Just a little more time taken on calculations during the revision period can give you the confidence you need to perform any calculation that could come up, so that you know you will gain top marks on all those calculation questions.
Our calculation workbooks guide you through the calculations, step-by-step, and providing detailed answers, with cross references to the relevant CII study text. All questions and answers kept up-to-date to reflect changes to the exam syllabus and tax year, and you can download them instantly in PDF format.
Why not try before you buy? Download one of our free tasters:
..."I passed R02 - No doubt thanks to your fantastic workbook which helped no end! With the extra work that I did going through your workbook, this helped a great deal with feeling confident which in this exam particularly was useful given that the technique and timing is as important as the knowledge and skill in ensuring that you get through the questions in a timely manner. One could so easily become distracted or frustrated trying to work out/remember one particular formula to the deficit of the other questions but your workbook enabled me to feel glad that there were so many calculations in the exam whereby before I actually feared them."...
David Gunn, Adviser, Nottingham
Did You Miss These Posts on Our Blog?
Articles and Help for All Your Exams
You’ll find that there’s something for everyone when you check out our blog:
specific topics and how-to articles;
reviews of recent CII exam papers;
our Friday Five – a weekly quiz to give you a fun break from reading the study text;
study techniques that help you to retain your revision and keep your brain working for you, when you need it
Here are the blog posts you might have missed since our last newsletter:
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Here’s a reminder that the CII update their study texts throughout the examinable year to either incorporate new legislations, correct errors or clarify information. Many candidates aren’t aware of this, which can result in candidates studying out-of-date information.
To find out if you have the most up-to-date information, visit the CII website, navigate to your chosen exam and click on ‘learning solutions update’ in the ‘Unit updates’ section in the sidebar.
Note that we keep our resources up-to-date with any updates from the CII.